Whole Life Insurance: A Lifetime of Security or an Overrated Option?

 

In the face of the uncertainty that life and its constant changes and surprises bring, life insurance is a powerful tool. You never know how long you have but having a security blanket that protects the financial interests of your loved ones does bring a certain amount of relief. You can opt for whole life insurance or go for more feasible options such as term insurance.

 

What is whole life insurance?

Whole life insurance is a type of policy that covers the entire lifespan of the policyholder. With whole life insurance, you can secure your entire life up to 99-100 years of age.

 

The terms and conditions of a whole life insurance state that you can purchase a policy to cover the maximum limit of human life, i.e., 99 to 100 years. You can choose the sum assured to financially secure your loved ones in the event of your demise.

 

You must pay the premiums ascertained by the insurer regularly, and when the unfortunate happens, the insurance provider promises to pay your beneficiaries the sum assured as the death benefit.

 

What is term insurance?

Term insurance is another form of life insurance that offers more perks at a much more reasonable premium rate. Term insurance is available for short to long durations. You can insure yourself for 10 to 99 years as per your preferences and health conditions. When you secure yourself for a policy of 99 years tenure, it is equivalent to whole life insurance.

 

The conditions of term insurance differ based on the type of policy you purchase. You can choose shorter tenures and a low, medium, or high sum assured to protect your loved ones after your demise. The premiums are lower, especially if you purchase a term insurance plan at an early life stage.

 

Term insurance vs whole life insurance

Both whole life insurance and term insurance are incredible financial protection for your loved ones. However, there are a few key differences in term insurance vs whole life insurance, which are as follows:

 

1. Term insurance allows you to avail of 10 to 99-year tenure, whereas whole life insurance is only available for 99-100 years, which is not very flexible.
2. A term insurance plan can be a whole life insurance. However, whole life insurance is not a term insurance policy.
3. Since the policy tenure of term insurance can be shorter, you can opt for a return of premium. Thus, if you meet an untimely death within the policy tenure, then your beneficiaries receive the death benefit. However, if you survive the policy tenure, you can receive the maturity benefit, which is a lump sum amount to navigate financial distress.
4. The possibility of surviving the term insurance tenure is high as compared to the tenure of whole life insurance.
5. Term insurance vs life insurance also differs in terms of benefits. You can avail of different types of term insurance such as increasing term insurance, decreasing term plan etc. These variations help increase the sum assured or repay liabilities, thus offering more flexibility and assurance for your loved ones’ future. The terms of whole life insurance, on the other hand, are preset and do not change.
6. You can avail of ULIPs as part of your whole life insurance. These policies offer an opportunity for you to invest in the market to grow your wealth while securing the future of those you love. You can also avail of endowment plans that offer bonuses. Both these options allow you to increase your net worth and enjoy your fortune in your lifetime. However, term insurance does not allow market investments due to the low premium rates.

 

Term insurance vs whole life insurance presents a lot of primal differences. However, both plans enable you to secure the future of your loved ones effectively. Based on your financial priorities, you can choose from term insurance vs whole life insurance policy types.

 

Both term insurance and whole life insurance require you to opt for the return of premium or survival benefit, respectively. However, the tenure options for both differ drastically, thus making one better than the other based on your health and lifestyle.

 

Conclusion

Whole life insurance is a good life insurance option to protect those you leave behind after death. With this plan, you can rest assured that in the event of your demise during the policy tenure, which is very long, your beneficiaries are bound to receive the death benefit to help them cope. The premiums may not be as low as term insurance, but whole life insurance comes with specific perks if you opt for it.

When choosing between term insurance vs whole life insurance, you need to evaluate whether you want to build a savings plan in the long term or grow your wealth. Both can help secure the future of your loved ones and their financial needs, and both can benefit you immensely during your life.